The directive aims to reduce waste and bolster the repair sector.
By Paul A. Davies, Michael D. Green, and James Bee
On 2 February 2024, the European Parliament (Parliament) and European Council (Council) reached a provisional deal on a directive promoting the repair of broken or defective goods, known as the Right to Repair Directive.
The directive was proposed in March 2023 by the European Commission[1] (Commission), seeking to deliver on environmental targets outlined in the European
The target aims to set the path for climate neutrality by 2050.
By Paul A. Davies, Michael D. Green, and James Bee
On 6 February 2024, the European Commission (Commission) presented its recommendations for the EU’s 2040 climate target, following a detailed impact assessment on potential emission reduction pathways. This publication aligns with the implementation of the EU’s Climate Law, which enshrines the EU’s commitment to become climate-neutral by 2050, alongside the 2030 target to reduce net greenhouse gas (GHG) emissions by at least 55%, relative to 1990.
The Commission recommends a 90% net GHG reduction by 2040, as compared to 1990 levels. Notably, the recommendation refers to “net” GHG reduction, and therefore opens the door for the use of carbon removal technologies within the EU to meet the target.
For in scope companies, disclosures may be required as early as the reporting period for the 2024 financial year.
By Paul A. Davies, Michael D. Green, and James Bee
On 22 December 2023, the Commission Delegated Regulation specifying the first set of European Sustainability Reporting Standards (ESRS) was published in the Official Journal of the European Union (EU).[1] The ESRS apply from 1 January 2024, for financial years beginning on or after that date.
The ESRS set out specific disclosure requirements for companies required to report under the Corporate Sustainability Reporting Directive (CSRD). The first set of sector-agnostic ESRS cover sustainability-related impacts, risks, and opportunities relating to a range of environmental, social, and governance issues, and will be followed by additional sector-specific standards over the coming years.[2]
The new rules would oblige companies to integrate their human rights and environmental impact into their management systems.
By Paul A. Davies, Michael D. Green, and James Bee
On December 14, 2023, the European Council (Council) and European Parliament (Parliament) reached provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD). The agreement follows an extensive negotiation processes, which began in June 2023, after the European Commission had initially proposed the CSDDD in February 2022.
The CSDDD’s key aim is to enhance the protection of the environment and human rights globally. The CSDDD as proposed will set obligations for companies regarding the actual and potential adverse impacts of their own operations, those of their subsidiaries, and those carried out by business partners, described as the “business chain of activities.” The CSDDD would also establish a requirement for large EU companies to adopt a plan to ensure that their business model and strategy are compatible with the Paris Agreement, i.e., including concrete targets and measures in line with limiting global warming to 1.5 °C.
The proposed CSDDD would establish rules on penalties and civil liability for infringements (although these will ultimately be set by Member States).
Importers into the EU of CBAM goods should be aware of their transitional reporting obligations under the new rules.
By Paul A. Davies, Michael D. Green, and James Bee
On 17 August 2023, the European Commission (Commission) adopted rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which begins on 1 October 2023 and runs until 31 December 2025. The Implementing Regulation (IR) outlines the transitional reporting obligations of importers into the EU of CBAM goods and the methodology for calculating emissions from the production of such goods.
Renewable fuels of non-biological origin would play an expanded role in satisfying EU decarbonisation targets.
By Paul A. Davies, JP Sweny, Michael D. Green, James Bee, and Alexander Leighton
The European Council has formally endorsed the proposed amendments to Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (the Renewable Energy Directive), as provisionally agreed in principle between the European Council and European Parliament during the trilogue process.
The amendments, commonly referred to as RED III, would mandate that the share of renewable energy in the EU’s overall energy consumption must rise to a minimum of 42.5% by 2030, with a further non-binding EU-wide goal to achieve 45% by this date, in order to meet the EU’s legally binding target of a 55% reduction in greenhouse gas emissions by 2030 as compared to 1990 levels. RED III therefore proposes a more ambitious mandatory target than the 32% set under the existing text of the Renewable Energy Directive.
The regulation aims to minimise the EU’s contribution to deforestation and forest degradation.
By Paul A. Davies, Michael D. Green, and James Bee
The European Deforestation Regulation (EUDR) entered into force on 29 June 2023, following publication in the Official Journal of the European Union. However, the main requirements and prohibitions of the EUDR will apply from 30 December 2024, 18 months after the entry into force.
The regulation forms part of the European Green Deal (for more information on the Green Deal, refer to Latham’s blog post here), which includes a proposal to ensure EU consumption does not contribute to deforestation and forest degradation. The EUDR will repeal and broaden the scope of the existing EU Timber Regulation.[i]
The Guidelines build on current social, environmental, and technological issues facing businesses following the last update in 2011.
By Paul A. Davies, Michael D. Green, and James Bee
The Organisation for Economic Co-operation and Development (OECD) released updated Guidelines for Responsible Business Conduct on 8 June 2023 (the OECD Guidelines).
Background to the OECD Guidelines
The OECD Guidelines, introduced in 1976, set out voluntary principles and standards to ensure multinational companies embed due diligence practices, to enhance sustainable development and address adverse social and environmental impacts. Currently, 51 countries adhere to the OECD Guidelines, including the majority of EU Member States.
Trialogue negotiations have begun following the parliament’s vote.
By Paul A. Davies, Michael D. Green, and James Bee
On 1 June 2023, the European Parliament voted to adopt its initial negotiating position on the EU’s proposed Corporate Sustainability Due Diligence Directive (CSDDD).
If adopted, the CSDDD would apply to large EU and non-EU businesses with significant net turnover in the EU. It would impose requirements to identify, prevent, end, or mitigate the negative impact of activities on human rights and the environment. CSDDD is still in the trialogue stage, whereby the three core branches of the EU negotiate the final content of legislation. Hence, the specific details of the CSDDD continue to evolve as they are negotiated by the EU’s political institutions. Further, as a directive that would need to be transposed into the domestic law of each EU Member State and given the key role for national regulators under the proposals, the CSDDD’s exact scope and impact will depend on the results of the negotiations and its implementation in each of the EU’s jurisdictions.
The Commission is also consulting on proposed targeted amendments to the Taxonomy Climate Delegated Act and on the Taxonomy Disclosures Delegated Act.
By Paul A. Davies, Michael D. Green, and James Bee
On 5 April 2023 the European Commission opened a consultation on its proposal for four additional environmental objectives under the EU Taxonomy Regulation[1] (the Taxonomy), including: (i) sustainable use and protection of water and marine resources; (ii) transition to a circular economy; (iii) pollution prevention and control; and (iv) protection and restoration of biodiversity and ecosystems.
The Commission is seeking feedback on technical screening criteria (TSC) for economic activities that may substantially contribute to one or more of those four environmental objectives. The TSC do not only identify the technical requirements that an activity must meet to be considered to make a substantial contribution to one of these areas, they also specify the conditions by which the activities can be considered to not do any significant harm to the remaining areas.
The Commission has already adopted TSC related to the economic activities of two other environmental objectives: climate change mitigation and climate change adaptation.
The Commission is also proposing amendments to the Taxonomy Climate Delegated Act, introducing additional activities that may be considered to substantially contribute to climate change mitigation or climate change adaptation, as well as the Taxonomy Disclosures Delegated Act.